Partnership aims to turn UH research park into next Silicon Valley

UH's Energy Research Park on the Gulf Freeway once belonged to oil field services giant Schlumberger.

UH's Energy Research Park on the Gulf Freeway once belonged to oil...

University of Houston officials hope a deal worth up to $25 million will transform its Energy Research Park into a regional startup hub that eventually will pump jobs into the Houston economy and attract venture capital that state leaders crave.

As part of the deal, announced Thursday, three private investors - who came together to form the Texas Collegiate Regional Center - will put up $15 million for a new building at the research park near UH's main campus to house laboratories and startup businesses.

The group, which also will seek money from other investors, will put another $3 million to $10 million into UH-created technologies. The investors will help UH select inventions that are easily marketable; UH's research park, in turn, will provide space for outside startups also funded by the group.

The goal is to create a Gulf Coast version of Silicon Valley, which feeds heavily off Stanford University in Palo Alto, Calif.

"The benefit is enormous," said Rathindra Bose, UH vice president for research. "If we're going to create another 10, 15, 20 companies in the next five years, then each of these companies will be employing folks. I think this is going to have an economic impact for the city of Houston and also for the state of Texas."

A growing number of Texas public universities have launched such incubators in hopes of commercializing technology created by students and faculty, a common strategy on the east and west coasts.

UH's partnership comes as state officials look to boost venture capital investments in Texas. Just 5 percent of venture capital investment in emerging companies occurs in Texas, even though the state accounts for 9 percent of U.S. economic activity.

Skin cancer detector

The state faces a "chicken and egg" situation when it comes to luring venture capital, said Craig Casselberry, president of the nonprofit Texas Coalition for Capital. It's difficult to attract investors without strong, young companies with growth potential, but it's hard to get businesses going without funding, Casselberry said.

University incubators can play a critical role in attracting investment. Startups at universities are far more successful than others at bringing in funding. Jon Brumley Texas Venture Labs at the University of Texas at Austin, for instance, sees about 50 percent of its startups get some sort of investment. The rate for small businesses trying to make it without such support is just 1 percent, Casselberry said.

Last year, UH brought in more than $15 million in capital from 26 licenses and has a number of other technologies headed to market, Bose said. Those include an iPhone app that can detect skin cancer with 85 percent accuracy and a microscopic coating so protective you could spill wine on a white shirt and not see a trace of red. The coating also could protect solar cells from sun and rain damage.

"UH is in an excellent position," Bose said "We thought we should really take a leading role in translating our technology from the lab to the marketplace."

The Texas Collegiate Regional Center consists of three entrepreneurs: David Franklin, an executive vice president at Consumer Media Network; Huan Le, a Houston native and entrepreneur who is general counsel for software company DiCentral and co-founder of cloud-based electronic medical records service Medifr; and James Tao, a longtime investor in the San Francisco Bay area and a managing partner at Presidio Venture Capital. The three also run Houston Health Ventures, which invests in health care technology.

UH-created technology

Under the deal, an investment board, with appointees from both the Texas Collegiate Regional Center and UH, will select which technologies to fund. Initially, each project likely will get $250,000 to $1 million.

The Texas Collegiate Regional Center, meanwhile, will raise money from domestic and foreign investors. That money will be invested in UH-created technologies, but the group also may spend some on non-UH technologies to diversify its portfolio. UH may invest only in UH technologies under the agreement but will open up its new facilities to some outside companies.

Renu Khator, UH System chancellor and president, said the benefits will build over time. "Developing a more entrepreneurial culture promotes UH's overall academic and research mission to create new knowledge for the good of society," Khator said. "Ideally, the revenues from this arrangement will be used to support additional research that leads to even more innovation."